WASHINGTON — The West Coast port dispute is over.
The Pacific Maritime Association and International Longshore and Warehouse Union said Friday they had reached a tentative deal on a new five-year contract, bringing to a close a protracted negotiation that led to temporary shutdowns, choked international trade at 29 ports on the West Coast and took a financial toll on American businesses.
“After more than nine months of negotiations, we are pleased to have reached an agreement that is good for workers and for the industry,” said PMA President James McKenna and ILWU President Robert McEllrath in a joint statement. “We are also pleased that our ports can now resume full operations.”
Federal Mediation and Conciliation Service Acting Director Allison Beck confirmed that the two sides reached a tentative agreement.
“I am extremely pleased to announce today that after extensive negotiations and mediation provided by the FMCS and with the support and assistance of Secretary of Labor Tom Perez, Secretary of Commerce Penny Pritzker, and Los Angeles Mayor Eric Garcetti, representatives of the ILWU and PMA have tentatively agreed to a new contract, resolving all outstanding issues that divided them and that have affected operations at U.S. West Coast ports,” Beck said. “Due to the complexity of the issues the parties had to address, these have been lengthy and at times difficult negotiations. The parties persevered over a long and challenging process and were ultimately successful in averting any further situations that could have been disruptive to shipping operations and to the nation’s economy.
“As a result of their efforts, shippers can expect that normal operations will be restored as soon as possible at our nation’s West Coast ports,” Beck said.
Perez, who has been in San Francisco since Tuesday to help broker a deal on behalf of the Obama administration, said on a conference call with reporters Friday night that operations at the 29 West Coast ports will “begin in earnest” on Saturday evening. PMA and ILWU leadership and the federal mediator involved in the negotiations will now work diligently to restore business at the ports to full capacity, he noted.
“The agreement is fair for both workers and the businesses operating at the ports and brings to an end what had become a significant headwind for the American economy,” Perez said.
“In the past two weeks, the impasse over the major remaining issues took an increasing toll on our economy and the impasse had ripple effects far beyond the docks. Perishable fruits were rotting for days at the ports. Farmers already confronted with drought were now confronted with the man-made challenge of supply chain interruptions,” Perez said. “Retailers, manufacturers and small business owners faced empty shelves and angry customers. There were far too many victims across the country and that’s why the President sent me here.”
The ILWU membership must still ratify the tentative five-year contract and Perez said he was confident the 20,000 dockworkers represented by the ILWU would endorse it and ratify it.
“I would note that the recommendation from the steering committee of negotiators for the ILWU was unanimous,” Perez added. “So I am hopeful and confident that the rank and file will carefully review the agreement and I am hopeful they will approve it in short order.”
Rebuilding confidence in the ports and international business relationships, which have been strained over the past nine months of negotiations because of delays and congestion, will take more time, he said.
“In the shipping business, reliability is your currency and this protracted dispute has undeniably created a crisis of confidence in the West Coast ports,” Perez said. “Restoring that confidence in the ports will require a sustained effort by all stakeholders involved. I am confident that they are up to the challenge and that they understand the task ahead.”
Perez said when he joined the talks on Tuesday, the primary sticking point was the arbitration system used for resolving disputes that occur at work sites.
“They were able to go through some very hard work to come to a resolution that I think will absolutely transform the arbitration system into a better system,” Perez said. “I think it will enhance the efficiency of the ports and it will enhance fairness on both sides.”
Part of the revamp includes a new selection process for hiring arbitrators, and Perez indicated that a new set of arbitrators will be chosen under the system going forward.
“I don’t think anybody knows who the next arbitrators will be as a result of the new process,” he said. “What I do know and have great confidence in is that the new arbitration system is going to ensure that everybody gets a fair shake. That is what arbitration is and should always be about. That was what motivated both sides to make a fairly dramatic revamp in their model for resolving disputes. The reason this is important is if you have a dispute on the docks and it slows down the docks, time is money, so the arbitration system is a linchpin for the effective operations of a port.”
Asked if the federal government should have intervened sooner than it did in attempt to limit the damage to businesses, Perez said a federal mediator had been involved in the talks for nearly six weeks and had moved the ball from the 20-yard line to “first and goal at the 8-yard line.”
He noted the federal mediator was able to “bring closure” to very critical issues, including wages, health benefits, pensions and a chassis issue.
Retailers and apparel brands, who have been pressing the two sides to resolve their differences and reach a deal for nine months, hailed the announcement.
“We congratulate the ILWU and PMA for finally coming to agreement on a new labor contract. It is now time for the parties to quickly ratify the deal and immediately focus on clearing out the crisis-level congestion and backlog at the ports,” said Matthew Shay, president and chief executive officer of the National Retail Federation. “We also thank Secretary Perez and the administration for engaging the parties on this critically important economic and supply chain priority.
“The congestion, slowdowns and suspensions over the last few months have had a significant economic impact on the entire supply chain and those who rely on the West Coast ports to move their goods and products around the world and throughout the country,” Shay said. “The agricultural, manufacturing, retailing and transportation industries have all suffered due to the nine-month-long contract negotiations.”
Kelly Kolb, vice president of government affairs at the Retail Industry Leaders Association, said, “After months of congestion and the very real possibility of a debilitating shutdown, retailers are relieved to see a deal in place, and anxious to see the ports up and running at full capacity.
“It will take months for business to return to normal, but this is obviously a huge first step in the right direction,” Kolb said.
“After months of delays at our West Coast ports, we are pleased to hear that the ILWU and PMA have finally reached an agreement and ended their dispute,” said Juanita Duggan, president and ceo of the American Apparel & Footwear Association. “Now, we urge both sides to ratify the deal as quickly as possible so that the backlog at the ports can be cleared, and normal operations can resume.”
Duggan said the dispute, which led to delays and congestion at the ports of Los Angeles and Long Beach, which handle nearly 50 percent of all apparel and footwear trade, “has left a damaging effect on our industry — causing extreme delays and millions in lost sales.”
“The serious and negative impacts this dispute left on the economy demonstrates why we cannot let this happen again,” Duggan said.”